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Heidi O’Neill on Creating a Seamless Digital/Retail Experience

by News Desk

Heidi O’Neill is unflappable.

She was elevated to her current position, president of consumer and marketplace, right as the pandemic hit. And considering that she oversees the company’s fleet of more than 8,000 owned and partner retail stores globally — all of which were shuttered as the virus raged around the world — it forced her, and Nike, to quickly pivot.

“I started my official new role on March 11, two weeks earlier than I was supposed to start, as sport went dark, and the world went dark. John [Donahoe, chief executive officer] called me and said, ‘OK, it’s game time.’ That’s a moment I’ll never forget,” O’Neill said.

But O’Neill, who started her career at Levi Strauss and has been with Nike since 1999, was well-positioned for the challenge. Before being promoted to the new role, she was president of direct-to-consumer with responsibility for the company’s digital efforts as well, a category she still oversees.

Even before the pandemic, Nike had been shifting its focus more to its own direct channels and away from the traditional wholesale model on which it was built.

The storefront of Nike in New York, New York on Aug. 26, 2020.
Lexie Moreland/WWD

Since fiscal year 2018, Nike Direct has driven more than 75 percent of the revenue growth at the Nike brand, fueled by the company’s digital business, which posted sales of more than $9 billion in fiscal year 2021, nearly 35 percent of the total volume. This is a number that Nike achieved three years ahead of plan. By fiscal year 2025, the company has projected, Nike Direct will represent about 60 percent of the company’s overall business, led by growth in digital. And the Nike Mobile App posted increases of more than 50 percent in the third quarter of the current fiscal year, overtaking for highest share of digital demand.

So even before the health crisis, O’Neill was responsible for fueling growth in the d-to-c channels.

“I learned something about starting a new role,” she said, “which is that sometimes you can’t take the time to earn it or learn it, you just have to own it from the beginning.”

And own it she did.

“Certainly, none of us had handled a global pandemic before,” she said. “But we’d been through hard times before, and we just came in ready to make decisions,” she said.

While some of those decisions were tough ones — shutting all the stores and dealing with manufacturing and shipping delays — the team immediately “lit up other digital experiences” to replace what was lost at the brick-and-mortar level.

She also leaned heavily on the company’s Consumer Direct Acceleration program, a digitally focused strategy that ramps up investments in e-commerce and technology to create a seamless experience across all channels.

“We believe we can move the world forward with sport and our Consumer Direct Acceleration is at the core of our growth strategy,” she said. “We’ve been driving this Consumer Direct offense for over five years now. And you know, we can look at our results and know that it’s working.”

While online efforts have taken center stage, O’Neill said the retail stores have also had to change to meet the changing consumer demand.

She said, “The importance of real-life experiences and human connection is part of our mission. And stores are really an important part of that human connection. We’re continuing to push those boundaries of innovation, and as other retailers may be slowing or pausing, we’re as bold as ever.”

Nike’s stores today are “digitally powered” in their quest to “drive seamless connections with consumers,” she said, singling out the House of Innovation stores in Shanghai and New York City as examples. A third one of these store concepts opened in Paris during the pandemic. These stores boast a lot of experiences and the largest selection of Nike footwear in the world, as well as exclusive and collaborative product.

Nike’s House of Innovation.
Courtesy of Nike

And they’re big — the New York unit is six stories and 68,000 square feet. It includes customization stations, mobile checkouts, an enhanced focus on fashion and other bells and whistles such as The Vault, a members-only experience that offers products not available to everyone, as well as a sneaker lab.

In addition to the House of Innovation, the brand operates Nike Rise, a mid-size format that is located within the heart of urban areas around the world, and Nike Live, a smaller format targeted primarily to women.

O’Neill explained the differences this way: “If you think about our Rise concept, what we really want to do is connect with the sport pulse of the city. Cities around the world have connections to different sports at different times of the year, and we want the store to kind of light up and rise for the sports and the connection in that city. And we will be publishing local run routes, workouts, and it’s also a way for the whole family to gear up for all sports.”

The Live format, she continued, is “built for her” and 50 percent of the mix is apparel and footwear for women. “So it really is her home for sport and fitness.”

O’Neill said Nike doesn’t expect to open a large number of Innovation stores but will work instead to “elevate experiences at existing large-format stores like London. But our way to scale will be through our Rise and Live concepts.

“When you look at all of the impact of these together, we’ve got a fleet of over 8,000 Nike stores globally that serve 3 billion consumers,” she said. “And at last count, we had over 200 million active members. And we’ll continue rolling out stores over the next few years.”

Nike Rise store in Seoul.
Courtesy of Nike

O’Neill said consumers have historically looked to Nike for more than simply a “transaction” and the company responds to that by curating personal experiences for each customer. “We’ve done this through the years, taking on the role of personal shopper, personal trainer or coach,” she said. “Those are really important ways to connect with our consumers above and beyond our commercial work.”

For instance, Nike experts are available both online and offline to work with customers to find the right products, it offers exclusive product access and early releases based on personal preferences. “And we’re going to continue to invest in personal coaching online and offline, and training,” she said. “Our Nike Training Club is now in 180 countries. And we continue to innovate that content for Nike Run clubs launching at many of our new stores.”

The company’s Snkrs app, which experienced more than 90 percent growth in demand and nearly 80 percent growth in monthly active users during fiscal year 2021, is now offered in more than 50 markets around the world, with [South] Korea the next country to be added.

“Our sneakers app is doing some of the most innovative work around community, connecting sneaker heads and the sneaker community and even some of our neighborhood retail partners through experiences on livestream,” she said. “We have sneaker stylists, we bring in our sneakerhead community to share how they’re rockin’ their favorite new kicks. Those are just some of the ways we’re connected with the community youth sports culture.”

This whole process is indicative of a new way of thinking about retailing and consumer engagement, she said. “In the past, you might have thought about a channel, or even a series of independent channels. But now it’s more about how we create a seamless journey with all these experiences connected — with the member at the center.”

The Nike app, she said, connects consumers to the store experience by allowing shoppers to scan looks on a mannequin or check out remotely. Then there’s buy online, pick up in store, ship from store and the opportunity to book in-store expert sessions online. “We’re seeing high-double-digit growth for those services in-store,” she said.

Even though Nike is de-emphasizing wholesale, O’Neill said the outside retailers with which it works are an important part of the equation. Case in point: Nike recently integrated its membership programs with Dick’s Sporting Goods’ so customers who visit Dick’s will also have access to exclusive product or early access to merchandise just by being a Nike member.

“We’re able to service that across multiple touchpoints,” she said, “but it’s also an amazing business. Our most engaged members are 12 times more valuable than our least engaged. If you work out with us and buy with us, you’re 60 percent more valuable. So the business return for this kind of ecosystem effect is significant as well. And I think there’s much more potential.”

The Nike Live store in Williamsburg in Brooklyn, N.Y.
Courtesy of Nike

There’s also enormous potential in women’s, Nike believes. Although it has had high-profile ambassadors such as Joan Benoit Samuelson, the first Olympic Games female marathon champion, as well as tennis stars Serena Williams and Naomi Osaka on its roster for a long time, the company has doubled down on its efforts to lure women to the brand aggressively over the past few years.

Nike is the largest women’s athletic brand in the world, O’Neill said, with sales in fiscal 2021 of $8.5 billion, and demand for women’s product is expanding at double digits year-over-year. The company is also embracing less traditional “sports,” such as yoga, fitness, wellness and mindfulness to connect more closely with the female consumer. It has introduced bra-fit consultants and the launch of maternity as well as modest swimwear collections, and the Live retail stores are creating specific content for women, such as maternity runs for each trimester as well as postpartum activities.

“I see us taking the baton from the last 50 years and offering a surge of innovation for this business going forward,” she said.

Whether it’s women’s, digital or physical retail, O’Neill manages to juggle the demands of her high-stress job, something she attributes to her team and Nike as a whole.

“What’s pulled me through here at Nike is the human connection and the power of this amazing team. We wake up every day thinking we can actually make the world better and that’s kind of wind in the sails.”

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